As more families focus on passing on wealth to future generations, understanding how to do it tax-efficiently has never been more important.
According to a recent report¹, nearly half of UK adults (47%) plan to leave an inheritance, and over a third (38%) intend to transfer assets directly to their children. Yet many remain unaware of the best ways to do this while minimising Inheritance Tax (IHT) and preserving long-term value.
Growing Awareness of Intergenerational Wealth Transfer
Recent changes announced in the 2024 Autumn Budget have reshaped the inheritance landscape. New IHT rules for defined contribution pensions (coming into effect from April 2027) and caps on business and agricultural reliefs are prompting many to reassess their estate plans.
At the same time, with frozen tax thresholds and ongoing economic uncertainty, more people are seeking professional financial advice to ensure their wealth is transferred as efficiently as possible.
If you’re unsure how recent tax changes could affect your estate, now is the perfect time to review your financial strategy with a qualified adviser.
- Why Bonds Are Gaining Attention in Estate Planning
One increasingly popular solution for tax-efficient wealth transfer is the onshore investment bond. These bonds combine investment growth potential with favourable tax treatment, making them an attractive option for long-term estate planning.
When structured properly, bonds can:
Grow in a tax-deferred environment
Be transferred to family members without triggering an immediate tax charge
Allow recipients to use top-slicing relief and 5% annual tax-deferred withdrawals
This flexibility enables families to minimise future IHT liabilities while maintaining control over how and when assets are distributed.
Bonds and Trusts: A Powerful Combination
Placing onshore bonds within a trust structure offers even greater benefits. Trustees can:
Access the 5% annual withdrawal allowance without creating an income tax liability
Simplify the administration of the estate
Allocate specific bond segments to beneficiaries over time
This structure provides the flexibility to support beneficiaries at the right moments while aligning with the original intentions of the trust.
Bridging the Knowledge Gap
Despite these advantages, research shows that 67% of people are unaware of how bonds can help reduce inheritance tax or support efficient estate planning. This highlights a growing need for education and professional guidance in navigating the complex world of intergenerational wealth transfer.
Working with a chartered financial planner ensures your strategy reflects current tax rules, personal goals and long-term family objectives.
Want to understand how onshore bonds could fit into your inheritance plan?
Speak with our financial planning team today to explore your options.
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Simplicity and Flexibility for Every Generation
One of the greatest strengths of bonds is their simplicity. Unlike more complex investment structures, they offer a clear, transparent framework for managing wealth and tax.
They’re also highly adaptable, allowing ownership transfers, flexible withdrawals and the ability to adjust to life’s changing circumstances. Whether used within a trust or as part of a wider investment portfolio, bonds provide a practical, enduring solution for families aiming to build and preserve their legacy.
Take Action to Secure Your Financial Legacy
Bonds continue to evolve as a powerful tool for tax-efficient estate planning. They help families balance growth, flexibility and control, ensuring wealth is passed on in the most effective way possible.
Start planning your legacy today.
Our expert advisers can help you build a tailored strategy that protects your assets, minimises tax and supports your loved ones for generations to come.
Important Information
This article is for general information only and does not constitute tax, legal or financial advice. Tax treatment depends on individual circumstances and may change in the future.
Investments can go down as well as up, and you may get back less than you invested. Onshore bonds and trust structures should be considered as part of a long-term financial planning strategy.
Source data:
[1] Survey of 4,000 nationally representative UK adults conducted for LV= by Opinium in March 2025.